DeFi Education Fund Urges Senators to Reject Crypto Bill Amendments Targeting DeFi and Developers
The DeFi Education Fund has called on U.S. senators to oppose several proposed amendments in the Senate Banking Committee’s crypto market structure bill markup, arguing they would harm decentralized finance (DeFi) and software developers. Key contested amendments include: Amendment #42 (Senators Reed and Kim) — would authorize Treasury sanctions on smart contracts and centralized platforms tied to illicit activity; Amendment #45 (Sen. Reed) — defines digital assets under the Bank Secrecy Act; Amendment #47 (Sen. Reed) — removes a provision related to federal criminal offense for unlicensed money transmission; Amendments #72 and #73 (Sen. Cortez Masto) — narrow the non-controlling developer definition and expand FinCEN and Treasury authority over blockchain platforms; Amendments #74 and #75 — strengthen money-transmission laws and prohibit transactions involving unlawful DeFi protocols; Amendment #104 (Sen. Warren) — strikes a distribution carve-out for crypto offerings. The fund warns these measures could stifle innovation, constrain developer activity, and expand regulatory reach, potentially disrupting DeFi operations and compliance frameworks. Traders should monitor the Senate Banking Committee markup closely, as changes could affect regulatory clarity for digital assets, counterparty risk for DeFi protocols, and market sentiment toward token projects tied to decentralized applications.
Bearish
The proposed amendments expand regulatory authority, enable sanctions on smart contracts, tighten definitions under the Bank Secrecy Act, and restrict developer roles — measures that increase compliance costs and legal risk for DeFi protocols and related token projects. Historically, heightened regulatory uncertainty (for example, during major enforcement actions or when legislative proposals target crypto) has pressured crypto prices and reduced trading risk appetite in the short term as market participants de-risk, rebalance, or pull liquidity from affected protocols. In the short term, traders may see increased volatility and negative sentiment for tokens tied to DeFi platforms, especially those lacking clear custodial or compliance frameworks. In the medium to long term, if enacted, these rules could raise operational costs, deter new projects and developer innovation, and push some activity to less-regulated jurisdictions — a structural headwind for growth in DeFi and associated tokens. However, if amendments are rejected following lobbying and industry pushback, the negative impact could be limited and sentiment could recover. Overall, the immediate effect is likely bearish due to increased legal and regulatory risk.